What Fannie and Freddie are telling us

When you’re in the middle of a maelstrom, it’s hard to step back for a teaching moment.

The prospect of Fannie Mae and Freddie Mac failing is almost too unsettling to contemplate. As one investor told the New York Times, “If people lose faith in Fannie and Freddie, then the whole system freezes up, and nobody can buy a house, and the entire housing market can crash.”

We’re talking about a pair of institutions that hold or guarantee more than half of the nation’s mortgages.